Our compensation management teacher likes to spend the first several weeks of class going over some basic microeconomic theory (cost curves, total production, etc. Never even really get into isoquants, for those of you that are indeed econ majors). The reason he does this, he explains, is to educate us on basic business strategy. I really don’t see the point of it: it can be summarized in the equation:
Marginal Revenue=Marginal Cost
Meaning that you don’t hire someone unless you are sure that employee is actually doing something productive and making you money instead of engaging in competitive thumb-twirling with his employees (talk about a demotivator).
Our professor then goes on to explain that HR professionals, in general, are NOT in tune with the rest of the corporation on strategic issues, and this means an inefficient workforce. Mr. CEO apparently can’t send his directions correctly through the memos. Or perhaps his secretary couldn’t understand his drunken ramblings after a night of expensive champagne and $5000 an hour hookers.
Anyways, the point is that we absolutely cannot make a compensation strategy unless we know what the overall business strategy is. Once again, that should make perfect sense, and that’s why I increasingly think college is really just education for lazy smart people.
So, what kind of homework assignment do we get on Tuesday?
Develop an executive compensation bonus package.
What are the objectives?
Damned if I know. I just gotta design an executive compensation bonus package. Not even the whole package, just the bonuses.
I would laugh at the irony, but tuition is $7,000 per semester.